Thomas Friedman has argued in The World is Flat that those who deny rapid globalization will not survive in the global economy. First, we critically discuss Friedmans views and highlight the new globalization driven by outsourcing and vertical specialization. Second, we argue that Friedman pays insufficient attention to the spectacular growth of mega-cities in the developing world. The world is not flat, and the developing world certainly is not. Still, mega-cities tend to become too big. Their growth also goes hand in hand with formation of slums and congestion. We thus argue that there is a role for public policies.